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Why Shares of Sears Holdings Corp Were Flying Higher Today

Sears' stock popped as it announced another step in its partnership with Amazon.

What happened

Shares of Sears Holdings Corp (NASDAQOTH:SHLDQ) were soaring today after the struggling retailer said it would team up with Amazon (NASDAQ:AMZN) to sell and install tires. Sears said its Auto Centers would provide full-service tire installation and balancing for tires ordered on Amazon.com. As a result, the stock closed up 15.9%.

Image source: Sears.

So what

The move is the latest iteration of a partnership that began with Amazon last July when Sears said it would sell Alexa-enabled Kenmore appliances on Amazon's website. Now, Sears says it will become the first nationwide auto service center to offer ship-to-store service for tire installation from Amazon, and it will also sell DieHard tires on Amazon, similar to the Kenmore deal.

Sears will initially launch the program at 47 of its auto centers and is planning to ramp it up soon after to the more than 400 auto centers it has across the country.

Now what

The deal itself is unlikely to have a material impact on Sears' financial results as auto centers represent a small portion of its business, and the move won't do anything to prop up the fast-declining retail business. However, investors are desperate for good news out of Sears, and any opportunity it has to tie its fortunes to Amazon sounds promising. Some investors are hopeful that Amazon could even acquire Sears, but I think that's highly unlikely considering many of Sears' stores are decrepit and the brand has little value these days.

However, the partnership between the two companies could be extended in other ways, or Amazon could eventually buy one of Sears' product brands like Kenmore or DieHard. That prospect alone is not enough to stop Sears' spiraling financial performance, though.

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